MOTOR-CAR DEALS

Dominion, Volume 25, Issue 155, 28 March 1932, Page 7

MOTOR-CAR DEALS

Garage Fire Sequel INSURANCE QUESTIONS Two Similar Claims Judgment was delivered by Mr. Justice Reed in the Supreme Court on Thursday in actions brought by the Mercantile Finance Corporation, Ltd., Christchurch, against the New Zealand Insurance Company, Ltd., and the Queensland Insurance Company, Ltd., to recover the amount of the losses on vehicles, insured in the two offices, which were damaged by tire in Birkett’s garage in Thorndon Quay last April. In each of the cases, which were taken together, judgment was given for the defendant insurance company, his Honour indicating in the second case that in. view of the circumstances he much regretted having to find against the plaintiff. ‘■The broad facts are the same in both cases, but with certain essential differences in detail,” his Honour said. “The plaintiff company liiiances the purchase (Of motor-vehicles from various dealers. The mode of dealing seems to be as follows The plaintiff provides a printed form, which bears the title ’particulars of transaction,’ which a motor dealer requiring finance fills up. giving all details in connection, with the transaction with the proposed hire purchaser, particularly the identification numbers of the motor-vehicle, the selling price, and the terms. If the company proposes to finance the transaction it receives from the dealer the hire purchase agreement duly endorsed to the company, promissory notes in favour of the dealer for the amount of the instalments, also endorsed to the company, and a policy of insurance in the names of the dealer as owner, the company as mortgagee, and the hirer. “The dealer in both of the present actions was W. Birkett and Sons, Ltd., and the motor-vehicles in respect of which the insurance moneys are claimed were destroyed in an in endiai v 'if it that, firm's garage. It is indisputable that .this firm engaged in a se,.v.- of frauds upon the plaintiff companies by falsely representing the price at which the cars were sold, and thereby obtaining advances in excess of the real value. It is a fair inference that the garage was destroyed In order to obtain tlie several m • nr.’ ii. . ,r ii were also based on these false values. Plaintiff Innocent Party. “The plaintiff company is admittedly an entirely innocent party. The insurance companies defend upon the ground of false statements made in the proposals for insurance, which, in mos. cases, were signed by W. Birkett an i Sons. bin.. > ,<•• >i • miff company being no party to. ami not being aware of. the statements made in such proposals.” His Honour proceeded to deal with the action against the New Zealand Insurance Co., Ltd. Documents and evidence showed that Birkett and Sons, Ltd., had represented to the plaintiff that It had disposed of a certain large sedan car to Montague Denni. at a cash price of £1775. His Honour detailed transactions between the various parties in connection with this sale. “Conducted Tours, Ltd.” and “Montague Dennis” were both referred to as the hirer, and it appeared that the shareholders in Conducted Tours, Ltd., were Montague Dennis and W, Birkett and Sons, Ltd. On the proposal of insurance dated December 1” Montague Dennis was named as hirer. Alleged Mis-statements. According to the defendant company

the proposal contained two mis-state-ments—“ Dec. 1930, £1775,” 'appeared under the heading “Date of purchase and price paid by insured,” and “7 Ariki .Street, Hataitai,” was the reply to “Where is the motor vehicle usually housed?” It was shown that there was no garage or approach by which a car eould be taken into the allotment on which stood 7 Ariki Street. As to the first alleged mis-statement his Honour said' he was satisfied that the car in question was purchased by Birkett’s in July, 1930, for £951/3/9 and sold to Dennis in December for £1175. The books, he thought, afforded prima facie evidence that the true sale price was £1175. His Honour dealt next with the alleged mis-statement with regard to the housing. In his opinion the answer given to the question was inaccurate. It having been proved that in the present case two false statements were made in the proposal, the question was whether within the terms of the contract for insurance the policy was void, his Honour said. Mis-statements had been made by an “insured” and it was immaterial whether they had been authorised to be made on behalf of the other insured or not; the general contract was based on the truth of the statements in the only proposal made to the company. His Honour thought the claim failed. Judgment would be for the New Zealand Insurance Company, with costs. “Same Type of Fraud.” Turning next to the claim against the Queensland Insurance Company, his Honour said that in this case Birkett and Sous, Limited, were the. (local agents for tlie insurance company, and as the plaintiff company did a considerable amount of business with Birkett and Sons it had a large number of policies with the defendant company covering motorcars sold on the hire-purchase system by Birkett and Sons. Eight cars in this case were the subject of the same type of fraud as in the action against the N.Z. Insurance Company. His Honour found that in each case a false statement as to the sale price of the car had been made in the proposal for Insurance. There was a certain difference, however, with which his Honour went on to deal. This concerned the claim made on behalf, of the plaintiff that the defendant .company was estopped from raising as a defence that the policies were void owing to false statements made in the insurance proposal. Purely Question of Law. “Whether it is in accordance with business integrity that, in the circumstances of this case, the defence should be pleaded is not a question for this court,” his Honour later remarked. "The question is purely one of law as to whether the above facts estop the defendant company from setting up the mis-statements in the proposal as a defence to the plaintiff's claim... Much as I regret, in view of the circumstances, to have to liud against the plaintiff, I think the law compels me to do so. Judgment will be for the defendant company with costs according to scale, disbursements and witness expenses, and costs of interlocutory proceedings to be settled by the registrar. I desire to add that in the event of these cases going further, ami my judgment being reversed, that it is agreed by the parties that the amount recoverable by the plaintiff shall be ascertained by arbitration in accordance with the terms of the policies.”